Government shortfalls widespread, survey finds

In a survey of over 130 counties, the National Association of Counties (NACo) found the economic recession is widespread and impacting counties of all sizes, in all regions. The report also says money from the American Recovery and Reinvestment Act has yet to impact many of the survey’s respondents.

The survey of 138 counties from 34 states confirms what many city and state budget directors already know – it’s the worst budget crisis since the early 1990s, NACo executive director, Larry Naake, said in a statement. And with more unemployed workers in the private sector, county resources are thinning by the day.

“The great challenge for counties of all sizes in the months and years ahead is continuing to provide essential services to residents who are relying more on county services and programs,” Naake added, echoing the concerns of states and city governments that they cannot afford to meet the needs of the growing ranks of jobless residents.

Many counties across the country started their fiscal year with revenues dwindling. Fifty-six percent of county respondents said their fiscal year would end up south of $10 million in projected shortfall. Most counties blame the lack of revenue on property taxes (52%) and reductions in state or federal funding (50%), with sales taxes coming in a close third (46%).

To combat these revenue shortfalls, counties are taking a multi-pronged approach, with most delaying purchases and repairs and implementing pay freezes for county employees. Many counties are also using hiring freezes, delaying capital investments or dipping into their rainy day reserve funds. At least ten percent of counties have required employees to take unpaid leave, through furloughs.

According to NACo’s numbers, thirty-five percent of counties anticipating stimulus funds had yet to receive their cut of the $787 billion package. On November 1, the Recovery Accountability and Transparency Board released numbers from stimulus recipients at Recovery.gov, finding that 640,000 jobs were created or saved. The update also indicated that little more than one-fifth of the money awarded to state and local governments has been spent, according to data available on Recovery.gov.

Since the $787 billion American Recovery and Reinvestment Act was passed in February, just over $36.6 billion has actually made its way to state and local recipients in the form of loans, grants and contracts. Survey respondents said that most of that money, coming into counties, were for transportation projects (49%) or Community Development Block Grants (50%).

“Our grave concern is what happens to state and county budgets when the federal economic stimulus dollars end next year?” Naake said.